Cascading Power of Attorney &
Mutual Power of Attorney
Why get a Mutual Power of Attorney or Cascading
Power of Attorney?
Sadly, your spouse gets Alzheimer's disease at 55 years
of age. You decide that you want to sell the large family home and buy a smaller home
closer to amenities that can help your spouse.
The family home is in both your names. Your spouse no longer has the
mental capacity to sign documents. You have no power of attorney, therefore, your only
option is to apply to the Guardianship and Administration Board for permission to
sell the home.
During this court procedure you are forced to make your children swear
in court that you are not a spendthrift. Other people such as friends, other family
members and even neighbours are contacted to see whether they support your application. At
the hearing you are cross examined as to whether you are a good person to look after the
affairs of your wife or husband.
Eventually this government department tells you that you are allowed to
sell your home. However, it directs you to hold your spouse’s half of the proceeds in
a separate bank account and pay you some money each week to look after your wife or
husband. The department insists you keep accurate records of what you spend, even down to
the toiletries for your spouse.
Without all the proceeds of the sale of the home you can not afford to
buy another property.
This problem would have been prevented if you and your spouse had given
each other a Mutual Power of Attorney.
What is a power of attorney?
A power of attorney gives someone the authority to do
things on your behalf - "You stand in their shoes." For example, the person you
appoint can sell and buy another home on your behalf. With a power of attorney you don't
need to keep running off to a government department to get permission to do something.
Why is it ENDURING?
The power of attorney is enduring if it operates
when you are of unsound mind.
Why is it CASCADING?
A power of attorney is cascading if it has back
up people to act as your attorney. For example, you may appoint your spouse and then up to
two of your children if you become of unsound mind.
When does the power of attorney take effect?
You have a choice of when the enduring power of attorney
can come into effect:
you can make the power of attorney come into effect
from the moment it is signed (common for husband and wives); or
it can come into effect only when you become of
unsound mind (common for children).
How hard is it for my attorney to prove that I am of
unsound mind?
Your attorney must prove to a government official that
you are unable by reason of mental disorder to make reasonable judgements.
Most people make a Mutual Power of Attorney that comes into
effect immediately with their spouse. If they become of unsound mind then it comes into
effect for 1 or 2 of their children as well.
When can I make and revoke the power of attorney?
While you have the mental capacity you can make
and then revoke your power of attorney at any time.
If there is doubt about your legal capacity speak to your doctor. Your
doctor can give you a note stating that you are competent to sign.
Who do I appoint as my attorney?
Your attorney has to be over 18 years of age. It should
be someone you trust. People often appoint their spouse and then up to 2 children.
What are the attorney’s duties?
Your attorney must:
act in your best interests at all times;
act honestly and protect your assets;
prepare and keep records of all dealings and
transactions; and
not renounce a power during any period of your legal
incapacity, except with the permission of the Public Guardian.
Where do I register the power of attorney?
There is no need to register or stamp the power. It is
effective once properly signed. However, before you can buy or sell real estate in most
states under the power you must register it with the Office of Titles.
The Department of Land Administration charges for this privilege. People therefore often
only register the power when they are going to deal with real estate. You can register the
power at any time. However, after 3 months your attorney has to swear that the attorney
remains unrevoked.
Can I prepare an enduring power of attorney myself?
You can make an enduring power of attorney yourself
using prepared forms. However, there are a number of dangers with Power of Attorneys not
made by a lawyer working in this area of law.
Employees of the Office of Titles have stated that the formalities of
preparing, executing and witnessing Power of Attorney’s frequently contain errors.
Our experience confirms this to be true.
The problem is that you often only find out about the deficiencies when it is too late
to prepare and sign another power of attorney.
If a person helps you to prepare a Power of Attorney and it is wrong
then you may be able to sue the person who gave you the help. While you should talk to
your Accountant and Financial Adviser on the powers you need in a power of attorney, only
a lawyer can professionally give you advice on preparing a power of attorney document
itself.
What does it cost to have a professionally prepared
power?
We often charge a fixed fee to prepare your enduring power of
attorney. Please have your Lawyer, Accountant and Adviser ring us for a quote. Our service
includes:
customising the powers in your power of attorney to
suit your needs
advising on whether your power of attorney should be
Cascading and Mutual
getting instructions over the phone, in person and by
mail
arranging for 2 of our Barristers to witness your
power at our office
unlimited advice on how to sign your power if it is
signed out of our office and free checking of the power once it is signed
at your request, free storage of your power of
attorney in our safe custody
What if I don't worry about getting a power of
attorney?
Then you are putting at risk your own and your
family’s financial position. If you become of unsound mind then your family will have
to apply to the Public Guardian for permission to carry out your financial affairs. The
Public Guardian’s 1994 Annual Report said that:
"The increasing pressure on staff to respond to consumer needs,
together with increasing management and accountability requirements, means that the time
available for consideration and cross-checking of important information may be diminished.
This, in turn, increases the likelihood of errors of judgement and/or simple human
errors..."
Do you want to put your family through that pain?
The Public Guardian in Newsletter July 1994 said that such an
application was:
"considerably more complex and involved than the simple taking
out of an Enduring power of attorney. [An Enduring Power of Attorney is a] ..bit like
insurance...something most people now recognised as being desirable and necessary to
mitigate the effects of possible future trauma in their lives."
How do I revoke a Power of
Attorney?
The easiest way to revoke any Power of Attorney is to tear up
both copies. Usually your lawyer holds one copy of the Power of Attorney in
your safe custody packet. Send a signed letter to your lawyer stating that
the Power of Attorney is revoked and is to be destroyed. Your lawyer will
then tear up the Power of Attorney they hold for you.
It is prudent to send a signed letter to
your Attorney telling the Attorney that the POA is revoked and ask for all
copies to be posted back to you. Provided your Attorney received the
letter then it would be illegal for your Attorney to keep using the POA.
Criminal sanctions can even apply. Also write to all banks and other
people that have been presented the POA. Keep copies of all such letters.
If you are concerned that the POA may
still be used by the Attorney then you should send a letter to the Police
and the Guardianship & Administration Board in your particular state.
(In WA: Public Advocate, 10 William Street, Perth WA 6000)
Sometimes the POA is registered at
your local Land Titles Office (most POAs are
never registered at Titles Office). If any of your POAs are so registered then
attend at one of Land Titles offices with a copy of the POA. You will write on
the POA "Revoked" on each page. Sign each page. This is
witnessed (plus the witness address and job) and dated. Lodge this with
Titles Office. Lodgement costs are usually under $100. You can lodge the
"Revoked" POA even if the original POA has not yet been lodged
at the local Land Titles Office. Why would you do this? Well, the Donee may still try and lodge
the POA at the local Titles Office at a later time.
How do I get a Mutual and Cascading Power of
Attorney?
Speak with your Accountant and Adviser. You may require
other Estate Planning support, such as a Three Generation
Testamentary Trust Will. You need the advice of all professionals to make sure you get
maximum support.
Brett Davies Lawyers is a private law firm. We don't take clients off the street.
Your Lawyer, Accountant or Adviser are welcome to contact Brett Davies
Lawyers' Practice Manager on -
08 9325 9777. For more information in this area see our Manuals on: Estate Planning and information form: Inheritance Tax Planner and Mutual & Cascading Power
of Attorney Instruction Form.
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